Toyota vs. Government Motors

Danny GloverPosted at 10:07 am on February 24, 2010

The bureaucrats and politicians in Washington are out to get Toyota because of ongoing recalls of the Japanese automaker’s popular vehicles. The House held one hearing yesterday, and another is scheduled for today. Toyota also is target of a U.S. criminal probe and a Securities and Exchange Commission investigation.

Toyota’s U.S. operations are extremely successful, not saturated by inefficient union monopolies, and are in direct competition with the now government-owned General Motors.

From their first U.S. factory in 1988, the Japanese company’s success in the U.S. is extraordinary. In 2003, the Camry became the best-selling car in the U.S. and still is. In 2005, Fortune magazine stated: “By nearly every measure, Toyota is the world’s best auto manufacturer. It may be the world’s best manufacturer, period.” In 2006, Toyota became the third-biggest seller of cars and trucks in the U.S. In 2007, Toyota captured second place in the U.S. market, replacing Ford, which had held the No. 2 position since 1931. In 2008, as GM declined and temporarily avoided bankruptcy, Toyota surpassed their unionized competitor becoming the largest automaker in the world.

Toyota’s handling of the recall has been miserable. Weeks after I first learned that my car is subject to one of the recalls, I still haven’t been notified directly by the company, and so far as I know, there is no fix yet for the potentially faulty gas pedal in my 2009 Corolla. I’m not happy about that.

But the evidence that the federal government’s recent entrance into the car business has influenced its antagonizing approach to the Toyota recall is quite convincing:

There’s no question that in the first, heady days of recall, at least some in the Obama administration and Congress saw advantage in undermining Toyota. The majority owner of Government Motors felt it couldn’t hurt to fan the image of a “foreign” auto maker disregarding the safety of American drivers. Shoppers might just buy a Chevy instead, propping up government investment and bolstering United Auto Worker union jobs. And of course the trial bar would be thrilled by a fat new class-action target.

Vehicle recalls (there were 16.9 million in 2009 alone) are usually handled by the National Highway Traffic Safety Administration—but the Toyota case was commandeered by Obama Transportation Secretary Ray LaHood. He skewered the firm for being “a little safety deaf,” complained it hadn’t been responsive, and bragged it was the government that forced a recall. …

Over in Congress, a geographically notable contingent of representatives piled on. Rep. Bart Stupak, D-Mich., announced an investigation into “dangerous” malfunctions. Toyota was ordered to report to his Oversight subcommittee hearing next week. Rep. John Dingell, D-Mich., berated the company for taking “two years” to step up and ripped them for not recalling more models.

UAW lobbyist Alan Reuther demanded Toyota make amends by keeping open a unionized factory in California, currently scheduled for closure. Chrysler, GM and Ford started offering cash incentives for car buyers to trade in recalled Toyotas for domestic wares.

That leaves Toyota owners like me in the predicament of choosing the bad guy in this scenario. Toyota may not be the good guy, but given the choice between incompetent government and a private company with a solid track record, I pick the government as the one to wear the black hat.